Published 19 February 2008
Go Gecko Group chief executive Phil Strong leapt into the fray over real estate commissions today, in the wake of the collapse of The Joneses and a claim by national Real Estate Institute president Murray Cleland that discount models don’t work.
Said Mr Strong: “Lower priced commissions do work … even if the REINZ president doesn’t want to admit it….
“In claiming discount models don’t work, he has apparently forgotten about some of his other Real Estate Institute members who have successfully been selling property for lower commissions for a number of years.
“Go Gecko was the first in the market offering lower-priced commissions and we are still here.
“The Joneses didn’t fail because of their lower-priced commissions. There were many other factors in their business model that were the real reasons for the downfall.
“A centralised model will always struggle to provide the personal connection & local market knowledge. A central call centre with staff that have never even visited the properties does not work in real estate. And paying salespeople a salary takes away the motivation to work hard after-hours to bring a deal together. Those are the reasons I think their model failed.”
Mr Strong said commissions had nearly doubled since 2001, for the same amount of work. On the 2001 median sale price of $172,500, the average commission was $8325. On today’s median sale price of $347,450, the average commission had risen to $15,130 (at 4% to $300,000, 2% thereafter, $500 base fee plus gst).
“We still believe the real estate industry needs a major shake-up. Vendors are paying too much in commission – as can be seen by how much commissions have jumped in the last 7 years.
“Go Gecko has been successfully offering vendors lower commissions since mid-2005. We were here before The Joneses, and we’re still here. We’re proof that sensible commissions do work. But it’s only possible because we also focus on providing a high level of personal service with local offices & local connections.”
19 February 2008: The Joneses listing fails, liquidators called in
12 December 2007: The Joneses to list on NZAX through Wilkinson shell
Attribution: Company release, story written by Bob Dey for this website.